Exhibit 10.2


 


AMENDED AND RESTATED

SHARE PURCHASE AGREEMENT


 


AMONG


 


NEENAH
PAPER COMPANY OF CANADA


 


As
Seller


 


and


 


NPCC
HOLDING COMPANY, LLC


 


As
Seller Parent


 


and


 


NEENAH
PAPER, INC.


 


As
Guarantor


 


and


 


AZURE
MOUNTAIN CAPITAL HOLDINGS LP


 


As
Purchasers’ Parent


 


and


 


NORTHERN
PULP NS LP


 


As NPNS
Purchaser


 


and


 


AZURE
MOUNTAIN CAPITAL FINANCIAL LP


 


As
Azure Mountain Purchaser


 


MADE ON
JUNE 24, 2008


 




 


PICTOU
PULP MILL AND WOODLANDS OPERATIONS


 





 

















 


TABLE OF CONTENTS


 


	
  Article 1 – INTERPRETATION

  	
  1

  
	
   

  	
   

  
	
  1.1

  	
  Definitions

  	
  1

  
	
  1.2

  	
  Headings

  	
  6

  
	
  1.3

  	
  Extended Meanings

  	
  6

  
	
  1.4

  	
  Statutory References

  	
  6

  
	
  1.5

  	
  Accounting Principles

  	
  7

  
	
  1.6

  	
  Currency, Prices and Values

  	
  7

  
	
  1.7

  	
  Schedules

  	
  7

  
	
   

  	
   

  	
   

  
	
  Article 2 – SALE AND PURCHASE

  	
  7

  
	
   

  	
   

  
	
  2.1

  	
  Sale and Purchase of Purchased Shares

  	
  7

  
	
  2.2

  	
  Purchase Price

  	
  8

  
	
  2.3

  	
  Payment of Purchase Price

  	
  8

  
	
  2.4

  	
  Instruments of Conveyance and Assumption

  	
  8

  
	
   

  	
   

  	
   

  
	
  Article 3 – REPRESENTATIONS AND WARRANTIES

  	
  8

  
	
   

  	
   

  
	
  3.1

  	
  Seller’s Representations and Warranties

  	
  8

  
	
  3.2

  	
  Survival of Seller’s Representations, Warranties and
  Covenants

  	
  11

  
	
  3.3

  	
  Purchasers’ Representations and Warranties

  	
  12

  
	
  3.4

  	
  Survival of Purchasers’ Representations, Warranties and
  Covenants

  	
  13

  
	
  3.5

  	
  Representations and Warranties of Seller Parent and NPI

  	
  13

  
	
  3.6

  	
  Survival of Representations, Warranties and Covenants of
  Seller Parent and NPI

  	
  14

  
	
  3.7

  	
  Representations and Warranties of Purchasers’ Parent

  	
  14

  
	
  3.8

  	
  Survival of Representations, Warranties and Covenants of
  Purchasers’ Parent

  	
  16

  
	
   

  	
   

  	
   

  
	
  Article 4 – COVENANTS

  	
  16

  
	
   

  	
   

  
	
  4.1

  	
  Governmental Filings

  	
  16

  
	
  4.2

  	
  Expenses

  	
  16

  
	
  4.3

  	
  Indemnification for Brokerage Commissions

  	
  17

  
	
  4.4

  	
  Litigation

  	
  17

  
	
  4.5

  	
  Access to Records

  	
  17

  
	
  4.6

  	
  Non-Interference with Potential Sale of Woodlands

  	
  18

  
	
  4.7

  	
  Affiliation with Seller

  	
  18

  
	
  4.8

  	
  Further Assurances

  	
  18

  
	
  4.9

  	
  Notice of Events

  	
  19

  
	
  4.10

  	
  Conduct of Purchased Businesses

  	
  19

  
	
  4.11

  	
  Capital Projects

  	
  19

  
	
  4.12

  	
  Consents

  	
  20

  
	
  4.13

  	
  Tax Elections by Purchased Companies

  	
  20

  
	
  4.14

  	
  Dividends and Distributions by Purchaser Entities

  	
  20

  
	
   

  	
   

  	
   

  
	
  Article 5 – CONDITIONS

  	
  21

  



 

















 


	
  5.1

  	
  Conditions for the Benefit of Purchasers

  	
  21

  
	
  5.2

  	
  Conditions for the Benefit of Seller

  	
  23

  
	
  5.3

  	
  Mutual Conditions

  	
  24

  
	
   

  	
   

  	
   

  
	
  Article 6 – CLOSING ARRANGEMENTS

  	
  24

  
	
   

  	
   

  
	
  6.1

  	
  Closing

  	
  24

  
	
  6.2

  	
  Risk of Loss

  	
  25

  
	
   

  	
   

  	
   

  
	
  Article 7 – INDEMNIFICATION

  	
  25

  
	
   

  	
   

  
	
  7.1

  	
  Obligation of Seller to Indemnify

  	
  25

  
	
  7.2

  	
  Obligation of Purchaser Indemnitors to Indemnify

  	
  25

  
	
  7.3

  	
  Notice and Right to Defend

  	
  26

  
	
  7.4

  	
  Limitations on Indemnification

  	
  27

  
	
   

  	
   

  	
   

  
	
  Article 8 – TERMINATION

  	
  28

  
	
   

  	
   

  
	
  8.1

  	
  Termination

  	
  28

  
	
  8.2

  	
  Survival

  	
  28

  
	
  8.3

  	
  Confidentiality

  	
  28

  
	
   

  	
   

  	
   

  
	
  Article 9 – GUARANTEE OF SELLER’S OBLIGATIONS BY SELLER
  PARENT AND NPI

  	
  29

  
	
   

  	
   

  
	
  9.1

  	
  Seller Guarantee

  	
  29

  
	
  9.2

  	
  Guarantee Binding

  	
  29

  
	
  9.3

  	
  Subrogation

  	
  29

  
	
  9.4

  	
  Enforcement

  	
  29

  
	
   

  	
   

  	
   

  
	
  Article 10 – GUARANTEE OF PURCHASERS’ OBLIGATIONS BY
  PURCHASERS’ PARENT

  	
  30

  
	
   

  	
   

  
	
  10.1

  	
  Purchasers Guarantee

  	
  30

  
	
  10.2

  	
  Guarantee Binding

  	
  30

  
	
  10.3

  	
  Subrogation

  	
  30

  
	
  10.4

  	
  Enforcement

  	
  30

  
	
   

  	
   

  	
   

  
	
  Article 11 – GENERAL

  	
  31

  
	
   

  	
   

  
	
  11.1

  	
  Time of the Essence

  	
  31

  
	
  11.2

  	
  Public Announcements

  	
  31

  
	
  11.3

  	
  Benefit of the Agreement

  	
  31

  
	
  11.4

  	
  Third Party Beneficiaries

  	
  31

  
	
  11.5

  	
  Entire Agreement

  	
  31

  
	
  11.6

  	
  Amendments and Waivers

  	
  31

  
	
  11.7

  	
  Assignment

  	
  32

  
	
  11.8

  	
  Notices

  	
  32

  
	
  11.9

  	
  Remedies Cumulative

  	
  33

  



 

















 


	
  11.10

  	
  Governing Law

  	
  34

  
	
  11.11

  	
  Attornment

  	
  34

  
	
  11.12

  	
  Counterparts

  	
  34

  



 

















 


AMENDED AND RESTATED SHARE
PURCHASE AGREEMENT


 


THIS AGREEMENT is made on June 24, 2008, among NEENAH PAPER COMPANY
OF CANADA, an unlimited company incorporated under the laws of Nova Scotia (“Seller”), NPCC HOLDING COMPANY, LLC, a limited liability
company organized under the laws of Delaware (“Seller
Parent”), NEENAH PAPER INC., a corporation incorporated under the
laws of Delaware (“NPI”), AZURE
MOUNTAIN CAPITAL HOLDINGS LP, a limited partnership formed under the laws of
Ontario (“Purchasers’ Parent”), NORTHERN PULP NS
LP, a limited partnership formed under the laws of Ontario (“NPNS Purchaser”), and AZURE MOUNTAIN CAPITAL FINANCIAL LP, a
limited partnership formed under the laws of Ontario (“Azure
Mountain Purchaser”, and collectively with Mill Purchaser, the “Purchasers”).


 


PRELIMINARY STATEMENT


 


Each Purchaser
desires to purchase, and Seller desires to sell, shares of operating
subsidiaries of Seller that will hold, in the aggregate, substantially all of
the assets and properties owned by Seller which are used exclusively by or in
connection with (i) the business conducted by Seller at and only with
respect to its Pictou County, Nova Scotia pulp mill (the “Pictou Pulp
Mill” or the “Pulp Business”)
and (ii) the business conducted by Seller in respect of its timberland
properties in Nova Scotia (specifically excluding the Woodlands (as defined
herein)), including the Debert Nursery (as defined herein) (the “Woodlands Business”, and collectively with the Pulp
Business, the “Purchased Businesses”), and
substantially all of the liabilities relating to the Purchased Businesses.


 


The parties
hereto entered into a Share Purchase Agreement dated as of May 15, 2008
(the “Original Share Purchase Agreement”) and
such parties deem it desirable to amend and restate the Original Share Purchase
Agreement in its entirety as set out herein.


 


NOW
THEREFORE, in consideration of the premises and the covenants
and agreements herein contained, the parties hereto agree as follows:


 


ARTICLE 1 – INTERPRETATION


 


1.1          Definitions


 


In this
Agreement, unless something in the subject matter or context is inconsistent
therewith, the following terms shall have the respective meanings set out below
and grammatical variations of such terms shall have corresponding meanings:


 


“Additional Subscribed Shares” has the
meaning set out in the definition of Azure Mountain Shares;


 


“Affiliate” means, with respect to any
Person, any other Person directly or indirectly controlling, controlled by or
under common control with, such Person, and for these purposes “control” is the
power whether by contract or ownership of equity interests or otherwise to
select a majority of the board of directors or other supervisory management
authority of an Entity, whether directly or indirectly through a chain of
Entities that are “controlled” within the foregoing meaning;


 


1

















 


“Agreement” means this amended and
restated share purchase agreement including the Preliminary Statement and
Schedules to this agreement, as amended, supplemented or restated from time to
time;


 


“Ancillary Agreements” means,
collectively, the Transition Services Agreement and the Stumpage Agreement;


 


“Applicable Law” means any applicable
domestic or foreign, federal, provincial or local law, including any statute or
subordinate legislation or treaty and any applicable rule, regulation,
ordinance, requirement, order, Permit, judgment, injunction, award or decree or
other binding requirement of a Governmental Authority having the force of law;


 


“Asserted Liability” has the meaning set
out in Section 7.3(a);


 


“Asset Purchase Agreements” means
collectively, the Mill and Woodlands Purchase Agreement and the Finance
Purchase Agreement, and “Asset Purchase Agreement”
means either one of them;


 


“Assets” has the meaning set out in the
Mill and Woodlands Purchase Agreement;


 


“Assumed Liabilities” has the meaning
set out in the Mill and Woodlands Purchase Agreement;


 


“Azure Mountain” means Azure Mountain
Capital Financial Corporation, an unlimited company incorporated by Seller
under the laws of the Province of Nova Scotia, which will acquire the Finance
Assets from Seller pursuant to the Finance Purchase Agreement;


 


“Azure Mountain Shares” means all of the
issued and outstanding shares of Azure Mountain, consisting of (i) 41,993,380
fully paid no par value common shares of Azure Mountain, (ii) one fully
paid common share of Azure Mountain having a par value of Cdn$1,000, which was
issued at the time of incorporation of Azure Mountain, and (iii) the
25,000 common shares of Azure Mountain having a par value of Cdn$1,000 each
that will be issued to Seller pursuant to the Subscription Agreement prior to
the Closing (the “Additional Subscribed
Shares”), in respect of which Seller shall have paid to Azure
Mountain prior to the Closing the Canadian dollar equivalent of the amount (the
“Paid-Up Capital Amount”) that is the
difference between US$10,600,000 and the U.S. dollar equivalent of
Cdn$646,267.10, as determined using the Bank of Canada noon exchange rate on
the Business Day immediately prior to the Closing Date;


 


“Business Day” means a day other than a
Saturday, Sunday or statutory holiday in New York, New York, Atlanta, Georgia
or Halifax, Nova Scotia;


 


“Capital Projects” has the meaning set
out in Section 4.11;


 


“Claims Notice” has the meaning set out
in Section 7.3(a);


 


“Closing” means the closing of the
transactions contemplated hereby;


 


“Closing Date” means the date upon which
the last to be fulfilled or waived of the conditions set forth in Article 5
(other than those conditions that by their nature are to be satisfied at the 


 


2

















 


Closing, but subject to the fulfillment or waiver of those conditions)
shall be satisfied or waived in accordance with this Agreement, but no later
than June 30, 2008 without the mutual agreement of the Parties;


 


“Confidentiality Agreement” means the
confidentiality agreement dated December 11, 2007 between NPI, Blue Wolf
Capital Management LLC and Atlas Holdings LLC;


 


“Contract” means any agreement,
indenture, contract, lease, deed of trust, licence, option, instrument or other
commitment, whether written or oral;


 


“Debert Nursery” has the meaning set out
in the Mill and Woodlands Purchase Agreement;


 


“Distribution Agreement” means the
Distribution Agreement dated as of November 30, 2004 between
Kimberly-Clark Corporation and NPI;


 


“Down” has the meaning set out in Section 3.1(h);


 


“Effluent Treatment System” has the
meaning set out in the Mill and Woodlands Purchase Agreement;


 


“Entity” means a Person other than an
individual;


 


“Excluded Forest Licenses” has the
meaning set out in the Mill and Woodlands Purchase Agreement;


 


“Finance Assets” means the Assets as
defined in the Finance Purchase Agreement;


 


“Finance Purchase Agreement” means the
asset purchase agreement in the form attached as Schedule 1.1(a) to be
entered into between Seller and Azure Mountain prior to the Closing;


 


“Forest Licenses” has the meaning set
out in the Mill and Woodlands Purchase Agreement;


 


“GAAP” has the meaning set out in Section 1.5;


 


“Governmental Authority” means any
domestic or foreign, federal, provincial, municipal, local or other
governmental, quasi-governmental, legislative, executive, judicial or
administrative body or person having jurisdiction in the relevant
circumstances, including any governmental ministry, agency, branch, department,
commission, board, tribunal, bureau or arbitrator;


 


“Indemnifying Party” has the meaning set
out in Section 7.3(a);


 


“Indemnitee” has the meaning set out in Section 7.3(a);


 


“K-C Global” means Kimberly-Clark Global
Sales, Inc. and its successors and assigns;


 


“knowledge”, with respect to Seller, has
the meaning set out in the Mill and Woodlands Purchase Agreement;


 


3

















 


“lien or other encumbrance” or “Encumbrance” means any lien, pledge, hypothec, mortgage,
security interest of any nature, adverse claim, reservation, easement, title
retention agreement, claim, lease, charge, option, right of first refusal,
easement, servitude, transfer restriction under any shareholder or similar
agreement, encumbrance or any other restriction or limitation whatsoever, or
any Contract to create any of the foregoing;


 


“Losses” means all fines, losses,
liabilities, damages, deficiencies, costs or expenses (including interest,
legal fees and disbursements of legal counsel) arising directly or indirectly
as a consequence of such matter;


 


“Material Adverse Change” and “Material Adverse Effect” mean any event, change or effect
that, when taken individually or together with all other adverse effects, will
or is reasonably likely to have a materially adverse effect on the business,
affairs, capitalization, assets, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Purchased Businesses, taken as a
whole; provided, however, that effects or changes relating to:


 


(a)           changes
in general political and economic conditions and changes affecting generally
the industries and markets in which the Purchased Businesses are conducted
that, in any of the foregoing cases, do not affect the
Purchased Businesses, taken as a whole, in a disproportionate manner
relative to other participants in the same industry as the Purchased
Businesses;


 


(b)           the
effect of any changes in applicable laws, regulations or accounting rules; and


 


(c)           the
fact of the pendency of the transactions contemplated by this Agreement and the
identity of Purchaser;


 


are not Material Adverse Changes or Material Adverse Effects and are
not to be taken into account in determining whether a Material Adverse Change
or a Material Adverse Effect has occurred;


 


“Mill and Woodlands Purchase Agreement”
means the asset purchase agreement in the form attached as Schedule 1.1(b) to
be entered into between Seller and NPNS prior to the Closing;


 


“Mill Receivables” means the trade
receivables of the Pulp Business which will be acquired by Azure Mountain from
Seller pursuant to the Finance Purchase Agreement;


 


“Nova Scotia Forest Acts” has the
meaning set out in the Mill and Woodlands Purchase Agreement;


 


“NPI” has the meaning set out on Page 1;


 


“NPNS” means Northern Pulp Nova Scotia
Corporation, an unlimited company incorporated by Seller under the laws of the
Province of Nova Scotia, which will acquire the Assets and assume the Assumed
Liabilities from Seller pursuant to the Mill and Woodlands Purchase Agreement;


 


“NPNS Shares” means all of the issued
and outstanding shares of NPNS, consisting of 57,474,074 fully paid no par
value common shares of NPNS;


 


4

















 


“Original Effective Date” means May 15,
2008;


 


“Original Share Purchase Agreement” has
the meaning set out in the Preliminary Statement;


 


“Paid-Up Capital Amount” has the meaning
set out in the definition of Azure Mountain Shares;


 


“Person” means any individual,
corporation, company, unlimited liability company, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental Authority or other legal or business entity however designated or
constituted;


 


“Pictou Pulp Mill” has the meaning set
out in the Preliminary Statement;


 


“Pulp Business” has the meaning set out
in the Preliminary Statement;


 


“Pulp Supply Agreement” means the
Amended and Restated Pulp Supply Agreement dated as of November 30, 2004
between NPI and Kimberly-Clark Global Sales, Inc.;


 


“Purchase Price” has the meaning set out
in Section 2.2;


 


“Purchased Businesses” has the meaning
set out in the Preliminary Statement;


 


“Purchased Companies” means,
collectively, NPNS and Azure Mountain;


 


“Purchased Shares” means, collectively,
the NPNS Shares and the Azure Mountain Shares;


 


“Purchaser Indemnitors” has the meaning
set out in Section 7.2;


 


“Purchaser Required Consents” has the
meaning set out in the Mill and Woodlands Purchase Agreement;


 


“Purchasers” has the meaning set out on Page 1;


 


“Purchasers’ Parent” has the meaning set
out on Page 1;


 


“Receivables Financier” means the
purchaser of the Mill Receivables pursuant to the Receivables Purchase
Agreement, the identity of which Azure Mountain Purchaser disclosed to Seller
on the Original Effective Date;


 


“Receivables Proceeds” means the proceeds
from the sale of the Mill Receivables by Azure Mountain to the Receivables
Financier pursuant to the Receivables Purchase Agreement;


 


“Receivables Purchase Agreement” means
the receivables purchase agreement to be entered into between Azure Mountain, as
vendor, and the Receivables Financier, as purchaser, immediately after the
closing of the transactions contemplated by the Finance Purchase Agreement and
prior to the Closing, substantially in the form provided to Seller by Azure
Mountain Purchaser on the Original Effective Date;


 


“Retained Assets” has the meaning set
out in the Mill and Woodlands Purchase Agreement;


 


5

















 


“Retained Liabilities” has the meaning
set out in the Mill and Woodlands Purchase Agreement;


 


“Seller” has the meaning set out on Page 1;


 


“Seller Parent” has the meaning set out
on Page 1;


 


“Stumpage Agreement” has the
meaning set out in Section 5.1(a)(viii);


 


“Subscription Agreement” has the meaning
set out in Section 5.1(a)(xi);


 


“Taxes” means any federal, provincial,
local or foreign, income, capital, branch, goods and services, value added,
harmonized sales, gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or add-on minimum, ad
valorem, or excise tax, or any other tax, custom, duty, governmental fee or
other like assessment or charge of any kind whatsoever, together with any
interest or penalty, imposed by any Governmental Authority; provided, however,
that in no event shall Taxes be deemed to include any transfer tax or capital
gains tax payable in connection with the purchase and sale of the Assets;


 


“Time of Closing” means 11:00 a.m.
in Nova Scotia on the Closing Date;


 


“Transition Services Agreement” has the
meaning set out in Section 5.1(a)(vi);


 


“Woodlands” has the meaning set out in
the Mill and Woodlands Purchase Agreement;


 


“Woodlands Business” has the meaning set
out in the Preliminary Statement; and


 


“Year End Financial Statements” has the
meaning set out in the Mill and Woodlands Purchase Agreement.


 


1.2          Headings


 


The division of
this Agreement into articles and sections and the insertion of a table of
contents and headings are for convenience of reference only and are not to
affect the construction or interpretation of this Agreement.  The terms “hereof”, “hereunder” and similar
expressions refer to this Agreement and not to any particular Article, Section or
other portion hereof.  Unless something
in the subject matter or context is inconsistent therewith, references herein
to Articles and Sections are to Articles and Sections of this Agreement.


 


1.3          Extended Meanings


 


In this Agreement
words importing the singular number only include the plural and vice versa and words importing any gender include all
genders.  Unless something in the subject
matter or context is inconsistent therewith, the term “including” means “including
without limiting the generality of the foregoing”.


 


1.4          Statutory References


 


Unless something
in the subject matter or context is inconsistent therewith and except with
respect to Environmental Laws (as such term is defined in the Mill and
Woodlands 


 


6

















 


Purchase Agreement), each reference to any statute refers to that
statute and to the regulations made under that statute, as now enacted or as
the same may from time to time be amended, re-enacted or replaced.


 


1.5          Accounting Principles


 


Wherever in this
Agreement reference is made to a calculation to be made or an action to be
taken in accordance with generally accepted accounting principles, such
reference will be deemed to be to the generally accepted accounting principles
in the United States from time to time (“GAAP”),
applicable as at the date on which such calculation or action is made or taken
or required to be made or taken.


 


1.6          Currency, Prices and
Values


 


All references to
currency, prices and values (monetary, accounting, financial or otherwise)
herein are to lawful currency of Canada unless otherwise specified.


 


1.7          Schedules


 


(a)           The following Schedules are
attached to and form part of this Agreement*:


 


	
  Schedule

  	
   

  	
  Contents

  
	
  Schedule 1.1(a)

  	
  -

  	
  Form of
  Finance Purchase Agreement

  
	
  Schedule 1.1(b)

  	
  -

  	
  Form of
  Mill and Woodlands Purchase Agreement

  
	
  Schedule 3.1(d)

  	
  -

  	
  List of
  Consents and Approvals

  
	
  Schedule 3.1(h)

  	
  -

  	
  Description of
  Annual Maintenance Down

  
	
  Schedule 4.10

  	
  -

  	
  Conduct of
  Purchased Businesses

  
	
  Schedule 4.11

  	
  -

  	
  List of Capital
  Projects

  
	
  Schedule
  5.1(a)(vi)

  	
  -

  	
  Form of
  Transition Services Agreement

  
	
  Schedule
  5.1(a)(viii)

  	
  -

  	
  Form of
  Stumpage Agreement

  
	
  Schedule
  5.1(a)(xi)

  	
  -

  	
  Form of
  Subscription Agreement

  



 






* The schedules listed above have been omitted in accordance with Item
601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish
to the Securities and Exchange Commission a copy of any omitted exhibits or
schedules upon supplemental request.


 


(b)           Any matter disclosed on any
of the Schedules hereto shall be deemed to be disclosed on each other Schedule
hereto relating to such matters.


 


ARTICLE 2 – SALE AND
PURCHASE


 


2.1          Sale and Purchase of
Purchased Shares


 


Upon the terms
and subject to the conditions herein set forth, at the Closing:


 


7

















 


(a)           Seller
shall sell, assign, transfer, convey and deliver to NPNS Purchaser, and NPNS
Purchaser shall purchase from Seller, the NPNS Shares, being all of the issued
and outstanding shares of NPNS; and


 


(b)           Seller
shall sell, assign, transfer, convey and deliver to Azure Mountain Purchaser,
and Azure Mountain Purchaser shall purchase from Seller, the Azure Mountain
Shares, being all of the issued and outstanding shares of Azure Mountain.


 


2.2          Purchase Price


 


In consideration
of Seller’s sale, assignment, transfer and conveyance of the Purchased Shares
to Purchaser, each Purchaser shall pay to Seller $5.00 in cash at the Closing
(collectively, the “Purchase Price”).


 


2.3          Payment of Purchase
Price


 


Subject to
Sections 5.1 and 5.2, at the Closing, each Purchaser shall make a payment of
immediately available funds in Canadian dollars to Seller in an amount equal to
their respective portion of the Purchase Price.


 


2.4          Instruments of
Conveyance and Assumption


 


In order to
effectuate the sale, assignment, transfer and conveyance of the Purchased
Shares, Seller shall, or shall cause its Affiliates to, execute and deliver to
Purchasers, immediately prior to the Time of Closing, certificates evidencing
the Purchased Shares, duly endorsed in blank for transfer.


 


ARTICLE 3 – REPRESENTATIONS
AND WARRANTIES


 


3.1          Seller’s
Representations and Warranties


 


Seller represents
and warrants to Purchaser as follows and acknowledges that Purchaser is relying
on such representations and warranties in connection with its consummation of
the transactions contemplated hereby:


 


(a)           Due
Incorporation and Authority


 


Seller is an
unlimited company duly incorporated, validly existing and in good standing with
respect to filing its annual returns under the laws of the Province of Nova
Scotia and has all requisite corporate power and capacity to own, lease and
operate its assets, properties and business and to carry on its business as
presently conducted.


 


(b)           Authority
to Execute and Perform Agreement


 


Seller has all
requisite corporate power and capacity to enter into, execute and deliver this
Agreement and to perform its obligations hereunder.  This Agreement has been, and each of the
Asset Purchase Agreements, the Ancillary Agreements and the documents and
agreements to be 


 


8

















 


delivered by Seller and its Affiliates prior to or at the Closing hereunder
or thereunder will be, duly authorized, executed and delivered by each such
party, and (assuming the due authorization, execution and delivery of this
Agreement, the Asset Purchase Agreements, the Ancillary Agreements and the
documents and agreements to be delivered by Seller or its Affiliates hereunder
or thereunder by the other parties thereto and the validity and binding effect
hereof and thereof on such other parties) each is, or upon execution by Seller
or its Affiliates will be, a valid and binding obligation of Seller or its
Affiliates, as applicable, enforceable against such entities in accordance with
its terms.


 


(c)           No
Breach


 


Subject to
obtaining the Purchaser Required Consents, the execution, delivery and
performance by Seller and its Affiliates of this Agreement, the Asset Purchase
Agreements, the Ancillary Agreements and the other documents and agreements
required to be delivered hereunder or thereunder to which they are parties, and
the consummation by Seller and its Affiliates of the transactions contemplated
hereby and thereby, will not:


 


(i)    violate
or result in the breach of any provision of the constating documents of Seller
or such Affiliates or any resolution of the board of directors (or any
committee thereof) or shareholders of Seller or such Affiliates;


 


(ii)   violate,
result in the breach of, or default (or an event which, with notice or lapse of
time or both, would constitute a default) under, any Real Property Lease,
material Assumed Contract, material Permit, Collective Agreement or Forest
License, as each such term is defined in the Mill and Woodlands Purchase
Agreement;


 


(iii)  result
in the creation or imposition of any lien or other encumbrance upon the Assets,
the Finance Assets or the Purchased Shares (other than any liens or
encumbrances created by Purchaser); or


 


(iv)  violate
any Applicable Law applicable to Seller or such Affiliates, the Pulp Business,
the Assets, the Finance Assets or the Purchased Shares.


 


(d)           Consents
and Approvals


 


Except as
described in Schedule 3.1(d), the execution and delivery by Seller of this
Agreement, the Ancillary Agreements and the other agreements and documents
required to be delivered hereunder to which it is a party, and the performance
by Seller of its obligations hereunder, do not require Seller to obtain any
consent, approval or action of, or make any filing with or give any notice to,
any Governmental Authority or any other Person.


 


(e)           Taxes


 


(i)    Seller
has duly filed on a timely basis all tax returns required to be filed by it,
has duly, completely and correctly reported all revenue and other amounts and
information required to be reported thereon in all material respects and has
paid or remitted (in the case of goods and services tax, 


 


9

















 


harmonized sales
tax or other sales tax) all Taxes which are due and payable, and all
assessments, reassessments, governmental charges, penalties, interest and fines
due and payable by it.  Seller has made
adequate provision for Taxes payable for the current period and any previous
period for which tax returns are not yet required to be filed.  There are no actions, suits, proceedings,
investigations or claims pending or, to the knowledge of Seller, threatened against
Seller in respect of Taxes, governmental charges or assessments, nor are any
material matters under discussion with any Governmental Authority relating to
Taxes, governmental charges or assessments asserted by any such authority.  Seller has withheld from each payment made to
any of its past or present employees, officers or directors, and to any
non-resident of Canada, the amount of all Taxes and other deductions required
to be withheld therefrom, and has paid the same to the proper Tax or other
receiving officers within the time required under any applicable legislation.


 


(ii)   Seller
is not a non-resident of Canada for the purposes of the Income Tax
Act (Canada).


 


(f)            Representations
in Asset Purchase Agreements


 


Except as
disclosed in the schedules attached to each of the Asset Purchase Agreements,
each of the representations and warranties to be made by Seller in each of the
Asset Purchase Agreements is true and correct as of the Original Effective Date
and will be true and correct as of the Closing Date, and each such
representation and warranty is hereby expressly incorporated into this Section 3.1.


 


(g)           Purchased
Companies


 


(i)    At
the Time of Closing, the only outstanding shares of the Purchased Companies
will be the Purchased Shares, and Seller will be the beneficial owner of record
of the Purchased Shares, with good title thereto, free and clear of all
Encumbrances.  Upon completion of the
transactions contemplated by this Agreement, all of the shares of NPNS and
Azure Mountain will be owned by NPNS Purchaser and Azure Mountain Purchaser,
respectively, as the beneficial owners of record, with good title thereto, free
and clear of all Encumbrances (except for such Encumbrances as may have been
granted by Purchaser).


 


(ii)   At
the Time of Closing (A) the NPNS Shares will consist of 57,474,074 fully
paid no par value common shares of NPNS, and (B) the Azure Mountain Shares
will consist of 41,993,380 fully paid no par value common shares of Azure
Mountain, one fully paid common share with a par value of Cdn$1,000 and the
Additional Subscribed Shares in respect of which not less than the Canadian
dollar equivalent of US$10,000,000 shall remain outstanding and assessable.


 


10

















 


(iii)  No
Person other than Purchaser has or will have at the Time of Closing any
Contract for the purchase or acquisition from Seller of any of the Purchased
Shares.


 


(iv)  At
the Time of Closing, each of the Purchased Companies will be an unlimited
company duly incorporated, validly existing and in good standing with respect
to filing its annual returns under the laws of the Province of Nova Scotia, and
each will have all requisite corporate power and capacity to own, lease and
operate its assets, properties and business and to carry on its business as
then conducted.


 


(v)   At
the Time of Closing, (A) the sole assets and liabilities of NPNS will be
the Assets and the Assumed Liabilities as specified in the Mill and Woodlands
Purchase Agreement, and (B) the sole assets of Azure Mountain will be the
Receivables Purchase Agreement, the Finance Assets (other than the Mill
Receivables, which will have been sold to the Receivables Financier pursuant to
the Receivables Purchase Agreement) as specified in the Finance Purchase
Agreement, cash in the amount of the sum of the Receivables Proceeds plus the
Paid-Up Capital Amount as contemplated by the Subscription Agreement, and the
right to make a capital call in an amount that is not less than the Canadian
dollar equivalent of US$10,000,000 in respect of the partly paid Additional
Subscribed Shares.


 


(vi)  No
election has been filed under Treasury Regulation section 301.7701-3 to treat
either Purchased Company as an association taxable as a corporation for U.S.
federal tax purposes.


 


(h)           Maintenance
Down


 


There were no
material additions to or deletions from the budgeted maintenance work plan for
the annual maintenance down that occurred at the Pictou Mill in April and May 2008
as described in more detail in Schedule 3.1(h) (the “Down”).


 


3.2          Survival of Seller’s
Representations, Warranties and Covenants


 


The
representations and warranties and, to the extent they have not been fully
performed at or prior to the Time of Closing, the covenants of Seller contained
in this Agreement and any agreement, instrument, certificate or other document
executed or delivered pursuant hereto (including the certificates delivered
pursuant to Section 5.1(a)(iv)) shall survive the Closing for a period of
18 months from and after the Closing Date and, notwithstanding such closing or
any investigation made by or on behalf of Purchaser, shall continue in full
force and effect for the benefit of Purchaser during such period, except that:


 


(i)    the
representations and warranties set out in Section 3.1(g)(i) shall
survive and continue in full force and effect without limitation of time;


 


11
















 


(ii)   the
representations and warranties set out in the Asset Purchase Agreements and
incorporated herein pursuant to Section 3.1(f) shall survive and
continue in full force and effect for the periods specified therein; and


 


(iii)  a
claim for any breach of any of the representations and warranties contained in
this Agreement or in any agreement, instrument, certificate or other document
executed or delivered pursuant hereto involving fraud or fraudulent
misrepresentation may be made at any time following the Time of Closing,
subject only to applicable limitation periods imposed by law.


 


3.3          Purchasers’
Representations and Warranties


 


Each Purchaser
represents and warrants, as to itself only and on a several basis, to Seller as
follows and acknowledges that Seller is relying on such representations and
warranties in connection with its consummation of the transactions contemplated
hereby:


 


(a)           Due
Incorporation and Authority


 


Purchaser is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation or incorporation, as applicable, and has all
requisite corporate power and authority to own, lease and operate its assets,
properties and business and to carry on its business as presently conducted.


 


(b)           Authority
to Execute and Perform Agreement


 


Purchaser has all
requisite corporate power and authority to enter into, execute and deliver this
Agreement and to perform fully its obligations hereunder.  This Agreement has been, and the Ancillary
Agreements to be delivered by Purchaser at the Closing will be, duly
authorized, executed and delivered by Purchaser and (assuming the due
authorization, execution and delivery of this Agreement and the Ancillary
Agreements by the other parties hereto and thereto and the validity and binding
effect hereof and thereof on the other parties hereto and thereto) is, or upon
execution by Purchaser will be, the valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms.


 


(c)           No
Breach


 


The execution, delivery
and performance by Purchaser of this Agreement and the Ancillary Agreements and
the consummation by Purchaser of the transactions contemplated hereby and
thereby, will not


 


(i)    violate
or result in the breach of any provision of the constating documents of
Purchaser;


 


(ii)   violate,
result in the breach of, or default (or an event which, with notice or lapse of
time or both, would constitute a default) under, any material contract to which
Purchaser is a party or to which Purchaser or any of its assets or properties
may be bound; or


 


12

















 


(iii)  to
Purchaser’s knowledge, violate any statute, law or regulation of any
jurisdiction, which violation, individually or in the aggregate, could have a
material adverse effect on Purchaser’s ability to consummate the transactions
contemplated herein or the performance of its obligations hereunder.


 


(d)           Consents
and Approvals


 


The execution and
delivery by a Purchaser of this Agreement and the Ancillary Agreements and the
performance by Purchaser of its obligations hereunder and thereunder do not
require Purchaser to obtain any consents, approvals, authorizations, licenses,
permits or other actions of, or make any filings with, any Governmental
Authority or any other Person.


 


(e)           Actions
and Proceedings


 


There are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
arbitrator or other Governmental Authority against Purchaser, and there are no
actions, litigation or suits or legal, administrative or arbitral proceedings
of any type whatsoever pending, or to the knowledge of Purchaser, threatened,
against Purchaser which individually or in the aggregate could reasonably be
expected to adversely affect Purchaser’s ability to consummate the transactions
contemplated herein or the performance of its obligations hereunder.


 


3.4          Survival of
Purchasers’ Representations, Warranties and Covenants


 


The
representations and warranties and, to the extent they have not been fully
performed at or prior to the Time of Closing, the covenants of Purchaser set
forth in this Agreement will survive the Closing for a period of 18 months from
the Closing Date.


 


3.5          Representations and
Warranties of Seller Parent and NPI


 


Each of Seller
Parent and NPI represents and warrants to Purchasers as follows, in respect of
itself only, and acknowledges that Purchasers are relying on such
representations and warranties in connection with their consummation of the
transactions contemplated hereby:


 


(a)           Due
Incorporation and Authority


 


It is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of formation or incorporation and has all requisite corporate
power and authority to own, lease and operate its assets, properties and
business and to carry on its business as presently conducted.


 


(b)           Authority
to Execute and Perform Agreement


 


It has all
requisite corporate power and authority to enter into, execute and deliver this
Agreement and to perform fully its obligations hereunder.  This Agreement has been duly authorized,
executed and delivered by such party and (assuming the due authorization,
execution and delivery of this Agreement by the other parties hereto and the
validity and binding effect 


 


13

















 


hereof on the other parties hereto) is the valid and binding obligation
of such party enforceable against such party in accordance with its terms.


 


(c)           No
Breach


 


The execution,
delivery and performance by such party of this Agreement and the consummation
by such party of the transactions contemplated hereby, will not


 


(i)    violate
or result in the breach of any provision of the constating documents of such
party;


 


(ii)   violate,
result in the breach of, or default (or an event which, with notice or lapse of
time or both, would constitute a default) under, any material contract to which
such party is a party or to which such party or any of its assets or properties
may be bound; or


 


(iii)  to
such party’s knowledge, violate any statute, law or regulation of any
jurisdiction, which violation, individually or in the aggregate, could have a
material adverse effect on its ability to consummate the transactions
contemplated herein or the performance of its obligations hereunder.


 


(d)           Consents
and Approvals


 


The execution and
delivery by such party of this Agreement and the performance by such party of
its obligations hereunder do not require such to obtain any consents,
approvals, authorizations, licenses, permits or other actions of, or make any
filings with, any Governmental Authority or any other Person.


 


(e)           Actions
and Proceedings


 


There are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
arbitrator or Governmental Authority against such party, and there are no
actions, litigation or suits or legal, administrative or arbitral proceedings
of any type whatsoever pending, or to the knowledge of such party, threatened,
against such party which individually or in the aggregate could reasonably be
expected to adversely affect such party’s ability to consummate the
transactions contemplated herein or the performance of its obligations
hereunder.


 


3.6          Survival of
Representations, Warranties and Covenants of Seller Parent and NPI


 


The
representations and warranties of Seller Parent and NPI set forth in Section 3.5
will survive the Closing for a period of 18 months from the Closing Date.


 


3.7          Representations and
Warranties of Purchasers’ Parent


 


Purchasers’
Parent represents and warrants to Seller as follows and acknowledges that
Seller is relying on such representations and warranties in connection with its
consummation of the transactions contemplated hereby:


 


14

















 


(a)           Due
Incorporation and Authority


 


Purchasers’
Parent is a limited partnership formed, validly existing and in good standing
under the laws of Ontario and has all requisite corporate or similar power and
authority to own, lease and operate its assets, properties and business and to
carry on its business as presently conducted.


 


(b)           Authority
to Execute and Perform Agreement


 


Purchasers’
Parent has all requisite corporate or similar power and authority to enter
into, execute and deliver this Agreement and to perform fully its obligations
hereunder.  This Agreement has been duly
authorized, executed and delivered by Purchasers’ Parent and (assuming the due
authorization, execution and delivery of this Agreement by the other parties
hereto and the validity and binding effect hereof on the other parties hereto)
is the valid and binding obligation of Purchasers’ Parent enforceable against
Purchasers’ Parent in accordance with its terms.


 


(c)           No
Breach


 


The execution,
delivery and performance by Purchasers’ Parent of this Agreement and the
consummation by Purchasers’ Parent of the transactions contemplated hereby,
will not


 


(i)    violate
or result in the breach of any provision of the constating documents of
Purchasers’ Parent;


 


(ii)   violate,
result in the breach of, or default (or an event which, with notice or lapse of
time or both, would constitute a default) under, any material contract to which
Purchasers’ Parent is a party or to which Purchasers’ Parent or any of its
assets or properties may be bound; or


 


(iii)  to
Purchasers’ Parent’s knowledge, violate any statute, law or regulation of any
jurisdiction, which violation, individually or in the aggregate, could have a
material adverse effect on its ability to consummate the transactions
contemplated herein or the performance of its obligations hereunder.


 


(d)           Consents
and Approvals


 


The execution and
delivery by Purchasers’ Parent of this Agreement and the performance by
Purchasers’ Parent of its obligations hereunder do not require such to obtain
any consents, approvals, authorizations, licenses, permits or other actions of,
or make any filings with, any Governmental Authority or any other Person.


 


(e)           Actions
and Proceedings


 


There are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
arbitrator or Governmental Authority against Purchasers’ Parent, and there are
no actions, litigation or suits or legal, administrative or arbitral
proceedings of any type whatsoever pending, 


 


15

















 


or to the knowledge of Purchasers’ Parent, threatened, against
Purchasers’ Parent which individually or in the aggregate could reasonably be
expected to adversely affect such party’s ability to consummate the
transactions contemplated herein or the performance of its obligations
hereunder.


 


3.8          Survival of
Representations, Warranties and Covenants of Purchasers’ Parent


 


The
representations and warranties of Purchasers’ Parent set forth in Section 3.7
will survive the Closing for a period of 18 months from the Closing Date.


 


ARTICLE 4 – COVENANTS


 


The parties
hereto covenant and agree as follows:


 


4.1          Governmental Filings


 


As soon as
practicable after the execution of this Agreement, Seller and Purchasers shall
cooperate with each other and with their respective Affiliates and shall make
any and all filings and submissions to any Governmental Authority which are
required to be made in connection with the transactions contemplated hereby and
by the Asset Purchase Agreements.  Seller
shall furnish to Purchasers and their respective Affiliates and Purchaser shall
furnish to Seller and its Affiliates such information and assistance as the
other parties may reasonably request in connection with the preparation of any
such notices, filings or submissions. 
Each party hereto agrees to give the other parties hereto prompt written
notice of any notification that it receives from any Governmental Authority in
connection with the transactions contemplated hereby or by the Asset Purchase
Agreements.


 


4.2          Expenses


 


(a)           Subject to Section 4.2(b),
the parties to this Agreement shall bear their own respective expenses incurred
in connection with the preparation, execution and performance of this
Agreement, including all fees and expenses of agents, representatives, counsel
and accountants.


 


(b)           If any covenant of Seller to
be performed or condition of Closing in Section 5.1(a)(i), 5.1(a)(ii),
5.1(a)(iii), 5.1(a)(iv), 5.1(a)(vi), 5.1(a)(viii), 5.1(a)(ix) or
5.1(a)(xi) to be complied with by Seller for the benefit of Purchasers, which
performance or compliance was in the reasonable control of Seller or its
Affiliates, has not been performed or complied with at or prior to the Time of
Closing, Seller agrees to pay the reasonable costs and expenses of Purchasers
and their Affiliates actually incurred in connection with the transactions
contemplated hereby, including the reasonable fees and expenses of legal
counsel and consultants retained by Purchasers and their Affiliates, up to a
maximum amount of $750,000.


 


(c)           If any covenant of
Purchasers to be performed or condition of Closing in Section 5.2(a)(i),
5.2(a)(ii), 5.2(a)(iii) or 5.2(a)(v) to be complied with by
Purchasers for the benefit of Seller, which performance or compliance was in
the reasonable control of Purchasers or their Affiliates, has not been
performed or complied with at or prior to the Time of Closing, or 


 


16

















 


if the transactions contemplated by the Receivables Purchase Agreement
have not been consummated at or prior to the Time of Closing for any reason
that was in the reasonable control of Purchasers or their Affiliates,
Purchasers agree to pay the reasonable costs and expenses of Seller and its
Affiliates actually incurred in connection with the transactions contemplated
hereby, including the reasonable fees and expenses of legal counsel and
consultants retained by Seller and its Affiliates, up to a maximum amount of
$750,000.


 


4.3          Indemnification for
Brokerage Commissions


 


(a)           Seller
represents and warrants to Purchasers that there are no brokerage commissions,
finder’s fees or similar fees or commissions payable in connection herewith on
account of Seller’s actions or the actions of any of its Affiliates.  Seller agrees to indemnify and save Purchaser
harmless from any claim or demand for commission or other compensation by any
broker, finder, agent or similar intermediary claiming to have been employed by
or on behalf of Seller, NPI or any of their respective Affiliates, and to bear
the cost of any legal expenses incurred by Purchaser in defending against any
such claim.


 


(b)           Each
Purchaser represents and warrants to Seller there are no brokerage commissions,
finders’ fees or similar fees or commissions payable in connection herewith on
account of Purchaser’s actions or the actions of its Affiliates.  Each Purchaser agrees to indemnify and save
Seller and its Affiliates harmless from any claim or demand for commission or
other compensation by any broker, finder, agent or similar intermediary
claiming to have been employed by or on behalf of such Purchaser or any of its
Affiliates and to bear the cost of any legal expenses incurred by Seller or any
of its Affiliates in defending against any such claim.


 


4.4          Litigation


 


Until the Time of
Closing, Purchasers and Seller will promptly notify each other of any lawsuits,
proceedings or investigations, which are threatened or commenced or, to the
knowledge of a party, threatened against Purchaser or Seller, respectively,
which may relate to, or affect, the Purchased Businesses, this Agreement or the
transactions contemplated hereby or by the Asset Purchase Agreements.


 


4.5          Access to Records


 


After the Closing
Date, each Purchaser and Seller shall afford to each other and their respective
representatives the opportunity, upon reasonable request, to examine and make
copies of the books and records of NPNS or of the books and records of the
Purchased Businesses retained by Seller, as the case may be, relating to
periods prior to the Time of Closing and to consult with their respective
officers, employees, accountants and other representatives, in connection with
any bona fide business purpose, including
the preparation of tax and financial reports and the conducting of any audits
or disputes with respect thereto, the administration of the employee benefit
plans described in the Mill and Woodlands Purchase Agreement, the review of any
materials, books, records or circumstances relating to such party’s ongoing 


 


17

















 


obligations under this Agreement, the Ancillary Agreements, the Deeds
and Assignments or the Instruments of Assumption.  Each Purchaser and Seller shall each maintain
all such books and records and shall not destroy or dispose of any such books
and records without the prior written consent of the other for a period of six
years following the Closing Date. 
Notwithstanding the foregoing, a Purchaser or Seller may at any time
notify the others that they desire to dispose of identified books and records,
in which event the party receiving such notice may, at its own cost and
expense, take delivery of some or all of such books and records, failing which
the party giving such notice may dispose of such books and records without
further liability to the other parties.


 


4.6          Non-Interference with
Potential Sale of Woodlands


 


NPNS Purchaser,
on its own behalf and on behalf of its Affiliates, hereby covenants and agrees
with Seller that, for a period of 18 months from and after the Closing Date, it
will take reasonable steps to ensure that the Designated Persons and Senior
Management, for so long as they remain employees of NPNS Purchaser, do not
communicate with any Governmental Authority (including the Nova Scotia Ministry
of Natural Resources and the Premier of Nova Scotia or his other Cabinet level
ministers, staff or their deputies, employees or agents) that is known to such
Person to be involved with Seller’s efforts to sell, lease or otherwise dispose
of all or part of the Woodlands (each, a “Woodlands Disposition”)
with the intention of reducing the amount of proceeds to be realized by Seller
in connection with such Woodlands Disposition. 
Notwithstanding the foregoing, (a) any communication or other
action taken by or on behalf of NPNS or any other Affiliate of NPNS Purchaser
in good faith at the request of or with the consent of Seller in respect of the
Woodlands Disposition shall not give rise to a breach of this Section 4.6
by NPNS Purchaser, and (b) this Section 4.6 shall not apply in
respect of any actions taken by the Senior Management or other agents of NPNS
who provide assistance to Seller and its Affiliates in connection with the
Woodlands Disposition as contemplated in the Timberland Services Agreement to
be entered into by NPNS and Seller at the Time of Closing.  “Designated Persons”
means Tim Fazio and Adam Blumenthal.  “Senior Management” means Keith Johnson, Wayne Gosse and
Steve Rutledge.


 


4.7          Affiliation with
Seller


 


Neither Purchaser
nor its Affiliates shall represent to any third party that it, its Affiliates
or its business are in any way affiliated or associated with, or owned or
operated by, Seller or its Affiliates except to the extent required by or
permitted under any of the Ancillary Agreements or the Asset Purchase
Agreements.


 


4.8          Further Assurances


 


Seller and each
Purchaser will from time to time execute and deliver all such further documents
and instruments and do all acts and things as the other party may, either
before or after the Closing Date, reasonably require to effectively carry out
or better evidence or perfect the full intent and meaning of this Agreement.


 


18

















 


4.9          Notice of Events


 


Each of the
parties shall promptly notify the other party of any event, occurrence,
condition or circumstance of which it becomes aware from the Original Effective
Date through the Closing Date that would constitute a violation or breach of
any representation, warranty, covenant or agreement of such party in this
Agreement.


 


4.10        Conduct of Purchased
Businesses


 


(a)           From the Original Effective
Date and except as set forth in Schedule 4.10 or Section 4.10(b), Seller
shall, until the closing of the transactions contemplated by the Asset Purchase
Agreements, and thereafter shall until the Closing cause each Purchased Company
to: (a) conduct the operations of the Purchased Businesses in the ordinary
course of business in substantially the same manner as such operations have
been conducted since the close of business on the Original Effective Date, and
use all commercially reasonable efforts to preserve intact such operations,
including the Assets and all associated goodwill; (b) comply, in all
material respects, with all Applicable Law applicable to the operations of the
Purchased Businesses, the Assets and the Finance Assets; and (c) pay,
perform and discharge, when due, in the ordinary course of business, all
obligations of Seller with respect to the Purchased Businesses.


 


(b)           From and after the Original
Effective Date until and including the Closing, Seller shall perform of its
obligations under the stumpage agreement dated June 29, 2006 between
Nova Star Forestry Ltd. (“Nova”),
Atlantic Star Forestry Ltd. (“Atlantic”, and
together with Nova, “Stumpage Seller”)
and Seller (the “Nova Star Stumpage Agreement”) in the ordinary course of
business of the Pulp Business consistent with past practice, and Seller shall
not take any action with respect to the Nova Star Stumpage Agreement that
is not in the ordinary course of business of the Pulp Business and consistent
with past practice without the prior consent of NPNS Purchaser, which consent
shall not be unreasonably withheld; provided, that, if during such period of
time Stumpage Seller makes an offer to sell the Annual Purchase Amount (as
defined in the Nova Star Stumpage Agreement) to Seller pursuant to section
2.1 of the Nova Star Stumpage Agreement, Seller covenants that it will not
respond to such offer in any manner without the prior written consent of NPNS
Purchaser, which consent shall not be unreasonably withheld.


 


4.11        Capital Projects


 


Seller agrees to
proceed with the planned capital expenditures program associated with the Down
as set forth on Schedule 4.11 (the “Capital Projects”).  No material additions or deletions to the
Capital Projects shall occur prior to the Closing without the consent of NPNS
Purchaser, and the aggregate costs of the Capital Projects undertaken prior to
the Closing shall not exceed $2,300,000 without the consent of NPNS Purchaser.


 


19

















 


4.12        Consents


 


(a)           Consents


 


Prior to the
Closing Date, Seller and Purchasers will cooperate and use all commercially
reasonable efforts to:


 


(i)    obtain
the Purchaser Required Consents; and


 


(ii)   obtain
reissuance of all Excluded Forest Licenses in the name of NPNS,


 


in each case in order to permit or effect the transactions contemplated
by the Asset Purchase Agreements and subject to the limitations expressed
therein.


 


(b)           Minister’s
Consent


 


NPNS Purchaser
acknowledges that the Excluded Forest Licenses are not transferable and that
the Minister of Natural Resources of Nova Scotia may not agree to issue to NPNS
a forest resource processing facility license pursuant to the Nova Scotia
Forest Acts in respect of the operation of the Purchased Businesses or grant
its consent relating to the transfer of the Forest Licenses unless NPNS or NPNS
Purchaser first agrees to certain conditions imposed by the said Minister.  NPNS Purchaser is required to consent to the
acceptance by NPNS of conditions on transfer required by the Minster of Natural
Resources of Nova Scotia as long as those conditions do not have a material
adverse effect on the Purchased Businesses.


 


4.13        Tax Elections by
Purchased Companies


 


The parties acknowledge and agree that each
of NPNS and Azure Mountain will elect to be disregarded for U.S. tax purposes
pursuant to Treasury Regulation section 301.7701-3(c).  Subject to the Closing, Purchasers covenant
and agree that they shall cause each of NPNS and Azure Mountain to make such
election on or before the day that is 75 days after the date of incorporation
of the respective Purchased Company.


 


4.14        Dividends and Distributions
by Purchaser Entities


 


Purchasers’ Parent covenants and agrees
with Seller that, for a period of two years from the Closing Date, it shall
not, and it shall not permit NPNS, Azure Mountain, NPNS Purchaser or Azure
Mountain Purchaser (collectively with Purchasers’ Parent and any other Entity
that (i) is directly or indirectly wholly owned by Purchasers’ Parent and (ii) directly
or indirectly owns NPNS or Azure Mountain, the “Purchaser
Entities”) to, make or pay to any Related Person of a Purchaser
Entity (other than another Purchaser Entity) any dividend, distribution or
other payment in excess of the consolidated net income of the Purchased
Businesses, calculated in accordance with GAAP and excluding extraordinary
items and non-cash items, during such period of time; provided, however, that
the foregoing will not limit or restrict the Purchaser Entities’ ability to
make payments to any Person or to pay dividends or make distributions to a
Related Person (a) in respect of customary management and transaction fees
incurred by businesses similar to the Purchased Businesses in the ordinary
course of business, (b) in connection with the payment of any Taxes by the
Purchaser Entities or any 


 


20

















 


Related Person
which are or become due and payable in connection with the transactions
contemplated hereby or the ongoing operations of the Purchased Businesses, or (c) in
connection with the payment or reimbursement of any fees and expenses incurred
by or on behalf of the Purchaser Entities in connection with the negotiation
and closing of the transactions contemplated hereby.  For purposes of this Section 4.14, a
Related Person means any Person who directly or indirectly owns, in whole or in
part, or is under common ownership with, the Purchaser Entities.


 


ARTICLE 5 – CONDITIONS


 


5.1          Conditions for the
Benefit of Purchasers


 


(a)           The
sale by Seller and the purchase by Purchasers of the Purchased Shares are
subject to the following conditions, which are for the exclusive benefit of
Purchasers:


 


(i)      the transactions
contemplated by the Asset Purchase Agreements shall have been completed;


 


(ii)     the
representations and warranties of (A) Seller set forth or incorporated by
reference in Section 3.1 and (B) NPI and Seller Parent set forth in Section 3.5,
shall be true and correct in all material respects if the particular
representation and warranty is not by its terms so qualified, and in all
respects if by its terms it is so qualified, at the Time of Closing with the
same force and effect as if made at and as of the Time of Closing;


 


(iii)    Seller will have performed
or complied with all of the terms, covenants and agreements in this Agreement
to be performed or complied with by Seller at or prior to the Time of Closing;


 


(iv)    Purchasers will have been
furnished with certificates of officers of Seller, Seller Parent, NPI and each
Purchased Company certifying with respect to such entity, as applicable:


 


(A)          resolutions,
as appropriate, of shareholders and/or directors of such entity approving the
transactions contemplated herein and in the Asset Purchase Agreements;


 


(B)           the
incumbency of officers signing this Agreement, the Asset Purchase Agreements
and the Ancillary Agreements; and


 


(C)           in
respect of Seller only, the matters contemplated in Sections 5.1(a)(i), 5.1(a)(ii) and
5.1(a)(iii), and in respect of Seller Parent and NPI, the matters contemplated
in Section 5.1(a)(ii);


 


(v)     all Purchaser
Required Consents, Permits and reissuances of the Excluded Forest Licenses in
the name of NPNS shall have been obtained, as contemplated by and subject to
the limitations set forth in the Mill and 


 


21

















 


Woodlands
Purchase Agreement, in each case in form and substance reasonably satisfactory to
Purchaser;


 


(vi)    Seller or Seller Parent or
its designee shall have executed and delivered a transition services agreement
substantially in the form attached hereto as Schedule 5.1(a)(vi) (the “Transition Services Agreement”);


 


(vii)   K-C Global shall have
consented in writing to the transfer of NPI’s and Seller’s rights, obligations
and interests under the Pulp Supply Agreement to NPNS and NPNS Purchaser in
accordance with Section 12.01 of the Pulp Supply Agreement, in a form and
in substance reasonably satisfactory to NPNS Purchaser and Seller;


 


(viii)  Seller and NPNS shall have
executed and delivered a stumpage agreement substantially in the form
attached hereto as Schedule 5.1(a)(viii) (the “Stumpage Agreement”);


 


(ix)    Seller shall have delivered
or caused to be delivered to Purchasers:


 


(A)          assignments
or other instruments of transfer duly endorsed in blank, or accompanied by
share powers or other instruments of transfer duly executed in blank, and
otherwise in form and substance reasonably acceptable to Purchasers for
transfer of the NPNS Shares to NPNS Purchaser and the transfer of the Azure
Mountain Shares to Azure Mountain Purchaser;


 


(B)           the
minute books and share transfer records of the Purchased Companies;


 


(C)           a
written resignation and release from each of the officers and directors of the
Purchased Companies, effective as of the Time of Closing;  and


 


(D)          an
opinion of counsel to Seller (which may be Seller’s General Counsel) addressed
to Purchasers, subject to customary assumptions and qualifications and in form
and substance satisfactory to Purchasers and their counsel acting reasonably,
covering corporate existence of Seller and the Purchased Companies, power and
authority to enter into this Agreement, the Asset Purchase Agreements and the
Ancillary Agreements, and that the foregoing agreements are valid, binding and
enforceable in accordance with their terms, and the authorized and issued
capital of the Purchased Companies;


 


(x)     there shall have
been no Material Adverse Change since the date of the Year End Financial
Statements;


 


22

















 


(xi)    Seller shall have executed
and delivered to Azure Mountain a subscription agreement in the form attached
hereto as Schedule 5.1(a)(xi) (the “Subscription Agreement”);


 


(xii)   the transactions
contemplated by the Receivables Purchase Agreement shall have been completed;
and


 


(xiii)  all actions, proceedings,
instruments and documents required to implement this Agreement, or instrumental
thereto, and all legal matters relating to the transactions contemplated hereby
and by the Asset Purchase Agreements shall have been approved as to form and
legality by counsel for Purchaser, acting reasonably.


 


(b)           In
case any term or covenant of Seller or condition to be performed or complied
with for the benefit of Purchaser (including those set forth in Section 5.3
below) at or prior to the Time of Closing has not been performed or complied
with at or prior to the Time of Closing, Purchaser, without limiting any other
right that Purchaser has, may rescind this Agreement by notice to Seller
without any further obligation under this Agreement or waive compliance with
any such term, covenant or condition in whole or in part on such terms as may
be agreed upon.


 


5.2          Conditions for the
Benefit of Seller


 


(a)           The
sale by Seller and the purchase by Purchasers of the Purchased Shares are
subject to the following conditions, which are for the exclusive benefit of
Seller:


 


(i)    the
representations and warranties of (A) each of the Purchasers set forth in Section 3.3
and (B) Purchasers’ Parent set forth in Section 3.7, shall be true
and correct in all material respects, at the Time of Closing with the same
force and effect as if made at and as of such Time of Closing;


 


(ii)   Purchasers
will have performed or complied with all of the terms, covenants and agreements
in this Agreement to be performed or complied with by Purchasers at or prior to
the Time of Closing;


 


(iii)  Seller
will have been furnished with certificates of an officer of the general partner
of each Purchaser and of Purchasers’ Parent certifying with respect to such
entity, as applicable:


 


(A)          resolutions,
as appropriate, of shareholders and/or directors of such entity approving the
transaction contemplated herein;


 


(B)           the
incumbency of officers signing this Agreement and the Ancillary Agreements; and


 


(C)           in
respect of the Purchasers only, the matters contemplated in Section 5.2(a)(i) and
5.2(a)(ii), and in respect of Purchasers’ Parent, the matters contemplated in Section 5.2(a)(i);


 


23
















 


(iv)  all
Purchaser Required Consents and the reissuance of the Excluded Forest Licenses
in the name of NPNS shall have been obtained, as contemplated by and subject to
the limitations set forth in the Mill and Woodlands Purchase Agreement;


 


(v)   each
of the Purchasers shall have executed and delivered the Ancillary Agreements to
which it is a party; and


 


(vi)  K-C
Global shall have consented in writing to the transfer of NPI’s and Seller’s
rights, obligations and interests under the Pulp Supply Agreement to NPNS and
NPNS Purchaser in accordance with Section 12.01 of the Pulp Supply
Agreement, in a form and in substance reasonably satisfactory to NPNS Purchaser
and Seller.


 


(b)           If
any term or covenant of a Purchaser or condition to be performed or complied
with for the benefit of Seller (including those set forth in Section 5.3
below) at or prior to the Time of Closing has not been performed or complied
with at or prior to the Time of Closing, Seller, without limiting any other
right that Seller has, may rescind this Agreement without any further
obligation to Purchasers under this Agreement or waive compliance with any such
term, covenant or condition in whole or in part on such terms as may be agreed
upon.


 


5.3          Mutual Conditions


 


The sale by
Seller and purchase by Purchasers of the Purchased Shares is subject to the
condition, which is for the mutual benefit of Seller and Purchasers, that no
legal or regulatory action or proceeding in any jurisdiction will be pending or
threatened by any Person to enjoin, restrict or prohibit the transactions
contemplated by this Agreement or the Asset Purchase Agreements, and there
shall be in effect no injunction against Closing entered by a court of
competent jurisdiction.


 


ARTICLE 6 – CLOSING
ARRANGEMENTS


 


6.1          Closing


 


The sale and
purchase of the Purchased Shares will be completed at the Time of Closing on
the Closing Date at:


 


Stewart McKelvey Stirling Scales

Purdy’s Wharf Tower One

1959 Upper Water Street

Suite 900

Halifax,  Nova Scotia B3J 2X2

Canada


 


or another mutually agreeable location.


 


24

















 


6.2          Risk of Loss


 


Until the Time of
Closing the Assets and, except as otherwise contemplated by the Receivables
Purchase Agreement, the Finance Assets will remain at the risk of Seller.


 


ARTICLE 7 - INDEMNIFICATION


 


7.1          Obligation of Seller
to Indemnify


 


(a)           Subject to the limitations
contained in Sections 3.2 and 7.4(a), Seller agrees to indemnify, defend and
hold harmless Purchasers from and against all Losses actually incurred by
Purchasers based upon, arising out of, related to or otherwise in respect of:


 


(i)    any
breach of any representation or warranty of Seller contained in this Agreement
or in either of the Asset Purchase Agreements;


 


(ii)   Seller’s
breach of any covenants or agreements contained in this Agreement, including
the indemnification obligation set forth in Section 4.3(a), or in either
of the Asset Purchase Agreements;


 


(iii)  Seller’s
failure to perform or satisfy any of the Retained Liabilities; and


 


(iv)  all
obligations and liabilities of Seller, Seller Parent, NPI and their Affiliates
arising under or in connection with the Distribution Agreement not specifically
relating to the Assets or the Purchased Businesses.


 


(b)           Seller
agrees to indemnify, defend and hold harmless Purchasers and their Affiliates
(from and after the Closing, including Azure Mountain) from and against all
Losses actually incurred by Purchasers or their Affiliates based upon, arising
out of, related to or otherwise in respect of all obligations and liabilities
of Seller as of the Closing for any unpaid capital calls (the “Unpaid Capital Call”) in respect of the Additional
Subscribed Shares, provided that Seller’s indemnification obligation in respect
of the Unpaid Capital Call itself shall not exceed US$10,000,000, and further
provided that no such amounts shall be called or payable by Seller prior to August 29,
2008.


 


7.2          Obligation of
Purchaser Indemnitors to Indemnify


 


Subject to the limitations contained in
Sections 3.4 and 7.4(b), Purchasers and Purchasers’ Parent agree, and from and
after the Closing shall cause the Purchased Companies (collectively with
Purchasers and Purchasers’ Parent, the “Purchaser Indemnitors”)
to agree, to jointly and severally indemnify, defend and hold harmless Seller,
Seller Parent and their respective Affiliates from and against any Losses
actually incurred by Seller based upon, arising out of, related to or otherwise
in respect of:


 


(a)           any
breach of any representation or warranty of a Purchaser Indemnitor contained in
this Agreement;


 


25

















 


(b)           a
Purchaser Indemnitor’s breach of any covenants or agreements contained in this
Agreement, including the indemnification obligations set forth in Section 4.3(b);


 


(c)           the
failure of NPNS to perform or satisfy any Assumed Liability; and


 


(d)           any
incident, occurrence or circumstances relating to the Assets, the Finance
Assets or the Purchased Businesses commencing or coming into existence after
the Time of Closing.


 


7.3          Notice and Right to
Defend


 


(a)           Notice
of Asserted Liability.  Promptly after receipt by any party hereto
(the “Indemnitee”) of notice of any demand,
claim or circumstances which could give rise to a claim or the commencement (or
threatened commencement) of any action, proceeding or investigation (an “Asserted Liability”) that may result in a Loss, the
Indemnitee shall give notice thereof (a “Claims Notice”)
to the other party or parties (including Purchaser Indemnitors) obligated to
provide indemnification or payment pursuant to Section 7.1 or 7.2 (the “Indemnifying Party”). 
The Claims Notice shall describe the Asserted Liability in reasonable
detail, and shall indicate the amount of the Loss that has been or may be
suffered by the Indemnitee.  In no event
shall the Indemnitee’s failure to give a Claims Notice to the Indemnifying
Party relieve the Indemnifying Party of any liability under this Article 7
except to the extent the Indemnifying Party can establish that the Indemnitee’s
failure to give such Claims Notice materially prejudiced the Indemnifying Party’s
ability to adequately defend such claim or any related or other claim.


 


(b)           Right
to Defend.  Subject to
Sections 7.3(b)(i) - (iv), the Indemnifying Party may elect to compromise
or defend, at its own expense and with counsel reasonably satisfactory to the
Indemnitee, any Asserted Liability, and if the Indemnifying Party so elects to
compromise or defend, the Indemnifying Party shall have the right to control
the defense of such Asserted Liability. 
If the Indemnifying Party elects to compromise or defend such Asserted
Liability, it shall within fifteen (15) days (or sooner, if the nature of the
Asserted Liability so requires) notify the Indemnitee of its intent to do so,
and the Indemnitee shall cooperate in the compromise of, or defense against,
such Asserted Liability.  If the
Indemnifying Party does not initially elect within fifteen (15) days, the
Indemnifying Party may later elect to compromise or defend such Asserted
Liability on the giving of five (5) calendar days notice of its intention
to do so to the Indemnitee and the Indemnitee shall cooperate in the compromise
of, or defence against, such Asserted Liability.  If the Indemnifying Party elects not to
compromise or defend the Asserted Liability, fails to notify the Indemnitee of
its election as herein provided or contests its obligation to indemnify under
this Agreement, the Indemnitee may pay, compromise or defend such Asserted
Liability and the Indemnitee shall have the right to control the defense of
such Asserted Liability.  Notwithstanding
the foregoing,


 


26

















 


(i)    the
Indemnifying Party may settle or compromise any Asserted Liability, provided
that such settlement or compromise does not result in any liability to,
restriction on, or admission of, the Indemnitee;


 


(ii)   if
the Indemnifying Party is not defending an Asserted Liability, the Indemnitee
shall, if and whenever reasonably requested, provide the Indemnifying Party
with regular updates on the status of the Asserted Liability;


 


(iii)  if
the Indemnifying Party is not defending an Asserted Liability, the Indemnitee
may not settle or compromise such claim without first giving the Indemnifying
Party at least fifteen (15) calendar days advance written notice of an intended
settlement or compromise; and


 


(iv)  provided
that the Indemnifying Party is defending an Asserted Liability at its own
expense, the Indemnitee may not settle or compromise such claim over the
objection of the Indemnifying Party.


 


In any event, the Indemnitee may
participate, at its own expense, in the defense of such Asserted
Liability.  If the Indemnifying Party
chooses to defend any claim, the Indemnitee shall make available to the
Indemnifying Party any books, records or other documents within its control
that are necessary or appropriate for such defense.


 


7.4          Limitations on
Indemnification


 


(a)           The
indemnification provided for in Section 7.1(a) shall be subject to
the following limitations:


 


(i)    Seller
shall not be obligated to pay any amounts for indemnification under Section 7.1(a) except
to the extent that the aggregate Losses theretofore claimed as indemnifiable
Losses pursuant to Section 7.1(a) and actually incurred by Purchaser
(net of insurance recoveries thereunder) exceed $500,000, subject to the limits
set forth in clauses (ii) and (iii) below;


 


(ii)   Seller
shall not be obligated to pay an aggregate amount for indemnification under Section 7.1(a) in
excess of $15,000,000; and


 


(iii)  Seller
shall not be obligated to pay any amount for indemnification under Section 7.1(a) if
the Loss associated with the individual claim does not exceed $100,000.


 


Notwithstanding anything to the contrary
contained herein, the indemnification provided for in Section 7.1(b) shall
not be subject to the foregoing limitations.


 


(b)           The
indemnification provided for in Section 7.2 shall be subject to the
following limitations:


 


27

















 


(i)    Purchaser
Indemnitors shall not be obligated to pay any amounts for indemnification under
Section 7.2 except to the extent that the aggregate Losses theretofore
claimed as indemnifiable Losses pursuant to Section 7.2 and actually
incurred by Seller (net of insurance recoveries thereunder) exceed $500,000,
subject to the limits set forth in clauses (ii) and (iii) below;


 


(ii)   Purchaser
Indemnitors shall not be obligated to pay an aggregate amount for
indemnification under Section 7.2 in excess of $15,000,000; and


 


(iii)  Purchaser
Indemnitors shall not be obligated to pay any amounts for indemnification under
Section 7.2 if the Loss associated with the individual claim does not
exceed $100,000; and


 


(iv)  Purchaser
Indemnitors shall not be obligated to pay any amount under Section 7.2 in
respect of Losses for which Seller has indemnified Purchasers under Section 7.1,
whether or not such indemnity is still in effect.  If after the expiry of the survival period
such Losses are based upon, arise out of or are related to (A) an
intentional misrepresentation of a matter which was represented or warranted to
by Seller herein or in either of the Asset Purchase Agreements, or (B) an
intentional failure by Seller to perform a covenant of Seller contained in this
Agreement or either of the Asset Purchase Agreements, Purchaser Indemnitors
shall have no obligation to indemnify under Section 7.2.


 


ARTICLE 8 – TERMINATION


 


8.1          Termination


 


This Agreement
may be terminated prior to the Closing by mutual written consent of each of the
parties hereto.  If this Agreement so
terminates, it shall become null and void and have no further force or effect,
except as provided in Section 8.2.


 


8.2          Survival


 


If this Agreement
is terminated in accordance with Section 8.1 and the transactions
contemplated hereby are not consummated, this Agreement shall become null and
void and have no further force or effect and none of the parties shall have any
liability to any other party under this Agreement.


 


8.3          Confidentiality


 


If this Agreement
is terminated, Purchasers and their respective Affiliates, representatives and
agents shall continue to be bound by and subject to the terms and conditions of
the Confidentiality Agreement.


 


28

















 


ARTICLE 9 – GUARANTEE OF
SELLER’S OBLIGATIONS

BY SELLER PARENT AND NPI


 


9.1          Seller Guarantee


 


Subject to the
provisions of Section 9.4, Seller Parent and NPI hereby absolutely,
unconditionally and irrevocably guarantee to Purchasers the punctual and
complete fulfillment and performance when due of all of Seller’s (including its
successors and permitted assignees) obligations under this Agreement (for
purposes of this Article 9, the “Seller Guarantee”).


 


9.2          Guarantee Binding


 


The liability of
Seller Parent and NPI under the Seller Guarantee shall be binding upon Seller
Parent, NPI and their respective successors and permitted assigns, shall not be
subject to any counterclaim, set-off, deduction or defence based upon any claim
that Seller Parent or NPI, as the case may be, may have against either of the
Purchasers under this Agreement or otherwise and shall remain in full force and
effect without regard to, and shall not be released, discharged or in any way
affected by, any circumstance or condition whatsoever (whether or not Seller
Parent or NPI shall have any knowledge or notice thereof) that might otherwise
constitute a legal or equitable discharge or defence of a guarantor (including
the insolvency or bankruptcy of Seller); provided, however, that any claim of
Purchasers under this Seller Guarantee against Seller Parent or NPI shall be
subject to, and Seller Parent and NPI shall have available to them in defence
of any such claim, any and all of Seller’s rights and defences, whether arising
under this Agreement or otherwise, in respect of any such claim, other than
those defences in respect of good standing, valid existence, corporate
capacity, due authorization and due execution or delivery.


 


9.3          Subrogation


 


To the extent of
any payment by Seller Parent or NPI to a Purchaser under this Seller Guarantee,
Seller Parent or NPI, as the case may be, shall succeed to all corresponding
claims
that such Purchaser may have and otherwise shall be subrogated to the rights of
such Purchaser against Seller in respect thereof.


 


9.4          Enforcement


 


A Purchaser shall
not be required to exhaust all of its remedies against Seller before enforcing
this Seller Guarantee; provided, however, that before enforcing the Seller
Guarantee, a Purchaser shall be required to provide evidence reasonably
satisfactory to Seller Parent or NPI that such Purchaser has demanded that Seller
fulfill or perform its obligations under this Agreement and Seller has failed
to do so, in whole or in part.  In such
circumstances, Seller Parent or NPI, as the case may be, shall pay all costs
and expenses (including legal fees and expenses) reasonably incurred by or on
behalf of Purchasers in enforcing the obligations of Seller Parent or NPI under
this Seller Guarantee.


 


29

















 


ARTICLE 10 – GUARANTEE OF
PURCHASERS’ OBLIGATIONS


BY PURCHASERS’ PARENT


 


10.1        Purchasers Guarantee


 


Subject to the
provisions of Section 10.4, Purchasers’ Parent hereby absolutely,
unconditionally and irrevocably guarantees to Seller the punctual and complete
fulfillment and performance when due of all of Purchasers’ (including their
successors and permitted assignees) respective obligations under this Agreement
(for purposes of this Article 10, the “Purchasers
Guarantee”).


 


10.2        Guarantee Binding


 


The liability of
Purchasers’ Parent under the Purchasers Guarantee shall be binding upon
Purchasers’ Parent and its successors and permitted assigns, shall not be
subject to any counterclaim, set-off, deduction or defence based upon any claim
that Purchasers’ Parent may have against Seller under this Agreement or
otherwise and shall remain in full force and effect without regard to, and
shall not be released, discharged or in any way affected by, any circumstance
or condition whatsoever (whether or not Purchasers’ Parent shall have any
knowledge or notice thereof) that might otherwise constitute a legal or
equitable discharge or defence of a guarantor (including the insolvency or
bankruptcy of either of the Purchasers); provided, however, that any claim of
Seller under this Purchasers Guarantee against Purchasers’ Parent shall be
subject to, and Purchasers’ Parent shall have available to it in defence of any
such claim, any and all of Purchasers’ respective rights and defences, whether
arising under this Agreement or otherwise, in respect of any such claim, other
than those defences in respect of good standing, valid existence, corporate
capacity, due authorization and due execution or delivery.


 


10.3        Subrogation


 


To the extent of
any payment by Purchasers’ Parent to Seller under this Purchasers Guarantee,
Purchasers’ Parent shall succeed to all corresponding claims
that Seller may have and otherwise shall be subrogated to the rights of Seller
against either of the Purchasers in respect thereof.


 


10.4        Enforcement


 


Seller shall not
be required to exhaust all of its remedies against Purchasers before enforcing
this Purchasers Guarantee; provided, however, that before enforcing the
Purchasers Guarantee, Seller shall be required to provide evidence reasonably
satisfactory to Purchasers’ Parent that Seller has demanded that the relevant
Purchaser fulfill or perform its obligations under this Agreement and such
Purchaser has failed to do so, in whole or in part.  In such circumstances, Purchasers’ Parent
shall pay all costs and expenses (including legal fees and expenses) reasonably
incurred by or on behalf of Seller in enforcing the obligations of Purchasers’
Parent under this Guarantee.


 


30

















 


ARTICLE 11 – GENERAL


 


11.1        Time of the Essence


 


Time is of the
essence of this Agreement.


 


11.2        Public Announcements


 


Neither Seller
nor Purchasers shall make any publicity release or announcement concerning this
Agreement, or make any disclosure with respect to the consideration paid
pursuant to this Agreement, or the transactions contemplated hereby without the
prior written approval thereof by Purchasers or Seller, as the case may be,
except as required by Applicable Law, in which case the party issuing the
release or making such disclosure shall so advise the other party in writing in
advance of such issuance or disclosure.


 


11.3        Benefit of the
Agreement


 


This Agreement
will inure to the benefit of and be binding upon the respective heirs,
executors, administrators, successors and permitted assigns of the parties
hereto.


 


11.4        Third Party
Beneficiaries


 


The provisions of
this Agreement are solely for the benefit of the parties hereto and their
respective Affiliates, successors and permitted assigns and shall not confer
upon any third Person any remedy, claim, liability, reimbursement or other
right in excess of those existing without reference to this Agreement.  Nothing in this Agreement shall obligate
Seller or its Affiliates or either Purchaser to assist any Employee to enforce
any rights such Employee may have with respect to any of the Benefit Plans or
other employment-related benefits referred to in this Agreement.


 


11.5        Entire Agreement


 


This Agreement
(including the Schedules hereto), the Ancillary Agreements referred to herein
and the Confidentiality Agreement constitute the entire agreement between the
parties hereto, with respect to the subject matter hereof and cancel and
supersede any prior understandings and agreements (including the Original Share
Purchase Agreement) between the parties hereto with respect thereto.  There are no representations, warranties,
terms, conditions, undertakings or collateral agreements, express, implied or
statutory, between the parties other than as expressly set forth in this
Agreement, the Ancillary Agreements and Confidentiality Agreement.


 


11.6        Amendments and Waivers


 


No amendment to
this Agreement will be valid or binding unless set forth in writing and duly
executed by each of the parties hereto. 
No waiver of any breach of any provision of this Agreement will be
effective or binding unless made in writing and signed by the party purporting
to give the same and, unless otherwise provided, will be limited to the
specific breach waived.


 


31

















 


11.7        Assignment


 


This Agreement
may not be assigned by any party hereto without the written consent of the
other parties hereto.


 


11.8        Notices


 


Any demand,
notice or other communication to be given in connection with this Agreement
will be given in writing and will be given by personal delivery or by facsimile
communication addressed to the recipient as follows:


 


	
   

  	
  (i)

  	
  to Seller:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Neenah Paper Company of Canada

  
	
   

  	
   

  	
  3460 Preston Ridge Road, Suite 600

  
	
   

  	
   

  	
  Alpharetta, Georgia 30005

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  Steven S. Heinrichs

  
	
   

  	
   

  	
   

  	
  Senior Vice President, General Counsel
  and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile:

  	
  678-518-3283

  
	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  to Seller
  Parent:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NPCC Holding Company, LLC

  
	
   

  	
   

  	
  3460 Preston Ridge Road, Suite 600

  
	
   

  	
   

  	
  Alpharetta, Georgia 30005

  
	
   

  	
   

  	
   

  
	
   

  	
  :

  	
  Attention

  	
  Steven S. Heinrichs

  
	
   

  	
   

  	
   

  	
  Senior Vice President, General Counsel
  and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile:

  	
  678-518-3283

  
	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  to NPI:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Neenah Paper, Inc.

  
	
   

  	
   

  	
  3460 Preston Ridge Road, Suite 600

  
	
   

  	
   

  	
  Alpharetta, Georgia 30005

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  Steven S. Heinrichs

  
	
   

  	
   

  	
   

  	
  Senior Vice President, General Counsel
  and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile:

  	
  678-518-3283

  
	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
  to NPNS
  Purchaser:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Northern Pulp NS LP

  
	
   

  	
   

  	
  c/o Atlas Holdings, LLC

  
	
   

  	
   

  	
  One Sound Shore Drive

  
	
   

  	
   

  	
  Suite 302

  
	
   

  	
   

  	
  Greenwich, Connecticut 06830

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  Tim Fazio

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile:

  	
  203-622-0151

  



 


32

















 


	
   

  	
  (v)

  	
  to Azure
  Mountain Purchaser:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Azure Mountain Capital Financial LP

  
	
   

  	
   

  	
  Blue Wolf Capital Management

  
	
   

  	
   

  	
  48 Wall Street

  
	
   

  	
   

  	
  31st Floor

  
	
   

  	
   

  	
  New York, New York 10005

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  Josh
  Wolf-Powers

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile:

  	
  646-349-2280

  
	
   

  	
   

  	
   

  
	
   

  	
  (vi)

  	
  to Purchasers’
  Parent:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Azure Mountain Capital  Holdings LP

  
	
   

  	
   

  	
  c/o Atlas Holdings, LLC

  
	
   

  	
   

  	
  One Sound Shore Drive

  
	
   

  	
   

  	
  Suite 302

  
	
   

  	
   

  	
  Greenwich, Connecticut 06830

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  Tim Fazio

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile:

  	
  203-622-0151

  



 


or to such other address, individual or electronic communication number
as may be designated by notice given by any party to the others.  Any demand, notice or other communication
given by personal delivery will be conclusively deemed to have been given on
the day of actual delivery thereof and, if given by facsimile communication, on
the day of transmittal thereof if given during the normal business hours of the
recipient and on the Business Day during which such normal business hours next
occur if not given during such hours on any day if receipt of such facsimile
communication is confirmed.


 


11.9        Remedies Cumulative


 


The rights and
remedies of the parties hereunder are cumulative and are in addition to, and
not in substitution for, any other rights and remedies available at law or in
equity or otherwise.  No single or
partial exercise by a party of any right or remedy precludes or otherwise
affects the exercise of any other right or remedy to which that party may be
entitled.


 


33

















 


11.10      Governing Law


 


This Agreement is
governed by and will be construed in accordance with the laws of the Province
of Nova Scotia and the federal laws of Canada applicable therein.


 


11.11      Attornment


 


For the purpose
of all legal proceedings, this Agreement will be deemed to have been performed
in the Province of Nova Scotia and the courts of the Province of Nova Scotia
(and all courts competent to hear appeals therefrom) will have exclusive
jurisdiction to entertain any action arising under this Agreement.  Each of the parties hereto hereby attorns to
the jurisdiction of the courts of the Province of Nova Scotia and all courts
competent to hear appeals therefrom.


 


11.12      Counterparts


 


This Agreement
and any amendment, supplement, restatement or termination of any provision of
this Agreement may be executed and delivered in any number of counterparts,
each of which when executed and delivered is an original but all of which taken
together constitute one and the same instrument.


 


[The next page is the signature page.]


 


34

















 


IN WITNESS WHEREOF the parties have executed
this Agreement.


 


 


	
  SELLER

  	
   

  	
  NEENAH PAPER COMPANY OF CANADA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
   

  
	
   

  	
   

  	
   

  	
    Name:Sean T. Erwin

  
	
   

  	
   

  	
   

  	
    Title:  President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SELLER PARENT

  	
   

  	
  NPCC HOLDING COMPANY, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
   

  
	
   

  	
   

  	
   

  	
    Name:Sean T. Erwin

  
	
   

  	
   

  	
   

  	
    Title:  President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GUARANTOR

  	
   

  	
  NEENAH PAPER, INC. (solely with respect to its

  representations and warranties in Section 3.5 and its

  obligations under Section 3.6 and Article 9)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
   

  
	
   

  	
   

  	
   

  	
    Name:Sean T. Erwin

  
	
   

  	
   

  	
   

  	
    Title:  President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PURCHASERS’ PARENT

  	
   

  	
  AZURE MOUNTAIN CAPITAL HOLDINGS LP, by its 

  general partner AZURE MOUNTAIN CAPITAL GP 

  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per

  	
   

  
	
   

  	
   

  	
   

  	
    Name:Adam Blumenthal

  
	
   

  	
   

  	
   

  	
    Title:  Manager

  



 


Signature page for Share Purchase Agreement


 

















 


	
  NPNS PURCHASER 

  	
   

  	
  NORTHERN PULP NS LP, by its general partner

  NORTHERN PULP NS GP ULC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per

  	
   

  
	
   

  	
   

  	
   

  	
    Name: Tim Fazio

  
	
   

  	
   

  	
   

  	
    Title:   President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  AZURE MOUNTAIN

  PURCHASER 

  	
   

  	
  AZURE MOUNTAIN CAPITAL FINANCIAL LP, by its 

  general partner AZURE MOUNTAIN CAPITAL 

  FINANCIAL GP ULC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per

  	
   

  
	
   

  	
   

  	
   

  	
    Name:Josh Wolf-Powers

  
	
   

  	
   

  	
   

  	
    Title:  Secretary

  



 


Signature page for Share Purchase Agreement